South Korea
Legislative and Regulatory Amendments
- Financial Services Commission (FSC)
Short Selling Balance Disclosure Standards
The FSC announced that the disclosure standards for short selling balances will be strengthened, requiring all holders with a short selling balance of 0.01% or more (excluding amounts under 100 million KRW) or 1 billion KRW or more to disclose their positions. This change follows the amendment to the Enforcement Decree of the Capital Markets and Financial Investment Business Act and aims to enhance transparency in short selling practices. The government is committed to implementing further improvements to the short selling system to ensure its proper functioning by the end of March 2025.
Date of Release: 5 Nov 2024
Implementation on: 1 Dec 2024
Applicable to: Capital Markets
The Financial Intelligence and Analysis Service announced the revision of the Anti-Money Laundering Business Regulations which will strengthen the capacity of financial companies and secure the robustness of the internal control system after deliberation by the Regulatory Reform Committee.
Date of Release: 12 Nov 2024
Implementation on: 13 May 2025
Applicable to: Financial Institutions
The FSC announced that the regulations on the Issuance and Disclosure of Securities were revised to improve the soundness of convertible bond market. The enhancement aims to achieve the following: enhance market transparency, prevent infringement on the interests of existing shareholders and for the base date for calculating the conversion value of private placement convertible bonds be clearly regulated.
Date of Release: 13 Nov 2024
Implementation on: 1 Dec 2024
Applicable to: Bond Market
Launch and Operation of the "Public Fund Listing Trading" Service
The FSC held a meeting to prepare for the launch of the "Public Fund Listing Trading" service, which allows public funds to be traded on exchanges like stocks and ETFs, enhancing investor convenience and revitalising the market. The service, designated as an innovative financial service, aims to reduce trading costs and make it easier for investors to engage with public funds. The launch is planned for the second quarter of 2025, with relevant regulations and systems being finalised in the interim.
Date of Release: 14 Nov 2024
Implementation on: Q2 of 2025
Applicable to: Public Funds
Requirement for Separate Deposits of Foreign Currency Investor Deposits
The FSC announced an amendment to the "Financial Investment Business Regulations" to strengthen the requirement for separate deposits of foreign currency investor deposits, effective 19 December 2024. Securities firms will now be required to deposit 80% of U.S. dollar investor deposits and 50% of Japanese yen investor deposits with securities finance companies to enhance investor protection and support liquidity during crises. Additionally, the remittance procedures for these deposits will be streamlined, allowing securities finance companies to remit directly to other institutions.
Date of Release: 11 Dec 2024
Implementation on: 19 Dec 2024
Applicable to: Securities Firms
The FSC announced its approval of the amendments to the "Enforcement Decree of the Capital Markets and Financial Investment Business Act," aimed at improving the self-shareholding system of listed companies, which will take effect on 31 December 2024. Key changes include restrictions on new share allocations for treasury shares during demergers, enhanced disclosure requirements for the holding and disposal of treasury shares, and measures to prevent regulatory arbitrage. These amendments aim to ensure that treasury shares are used to enhance shareholder value rather than to strengthen the controlling power of major shareholders.
Date of Release: 24 Dec 2024
Implementation on: 31 Dec 2024
Applicable to: Capital Market and Financial Investment Business
Consultations
- Financial Services Commission (FSC)
The FSC announced legislative notice for amendments to the Enforcement Decree and Regulations of the Capital Markets Act aimed at enhancing the competitiveness of public funds. Key proposals include allowing ETFs to invest in listed indirect REITs and real estate/REIT ETFs to expand investor choices and mandating periodic evaluations and assessments by external professional institutions for alternative investment funds to improve transparency and investor trust. The legislative notice period will run from November 20 to December 30, 2024, followed by necessary reviews and approvals for implementation in the first half of 2025.
Consultation Period: 20 Nov 2024 – 30 Dec 2024
Applicable to: Public Funds
Prior Notice of Legislative Changes on Short Sale Regulations
The FSC issued a prior notice of legislative changes to short sale regulations following the revised Financial Investment Services and Capital Markets Act, set to take effect on 31 March 2025. Key proposals include limiting the stock borrowing period for institutional investors, implementing measures to prevent naked short selling through electronic management systems and internal controls, and restricting short sellers from acquiring convertible bonds and warrants from the same issuer during specific periods. The comment period for these changes will last until 31 December 2024, with final revisions planned by March 2025 to ensure a smooth reintroduction of short selling activities.
Consultation Period: 21 Nov 2024 – 31 Dec 2024
Applicable to: Capital Markets
The FSC announced amendments to the Capital Markets Act and its subordinate regulations to diversify measures for dealing with unfair trading and illegal short selling. Key changes include restrictions on trading financial investment products for up to five years, limitations on executive appointments in listed companies, and guidelines for account payment suspensions. These measures aim to enhance investor protection, ensure market integrity, and are set to take effect on April 23, 2025, following a legislative notice period.
Consultation Period: 27 Dec 2024 – 5 Feb 2025
Applicable to: Capital Market
This document is provided for information purposes only and does not constitute legal, tax, investment, regulatory, accounting or other professional advice. For more information on the legal and regulatory status of IQ-EQ companies please visit www.iqeq.com/legal-and-compliance.